State Rep. Dave Hinman, a Republican from O’Fallon, toured the warehouse of St. Louis-based Triple High Seltzer, a hemp-derived THC beverage, on Feb. 7 with the company’s founder Will Spartin (Rebecca Rivas/The Missouri Independent).
How much it will cost to regulate intoxicating hemp products on sale in bars and liquor stores across the state has become a key flashpoint of the debate in the Missouri legislature.
Year after year, hemp business owners and distributors have asked the state to impose age restrictions and testing requirements for intoxicating hemp products rather than ban them outright.
The proposals always die over disagreements about how to enact the regulations — and who should enforce them.
This year, lawmakers are considering multiple proposals that differ regarding what kinds of products are allowed and the cap on THC content, the psychoactive chemical that produces the high consumers look for in marijuana products.
“The governor is looking for a compromise and a set of rules and regulations that will keep businesses open, employees working and most of all protect Missouri residents and keep the consumer safe,” said Republican state Rep. Dave Hinman of O’Fallon, during a General Laws Committee hearing Tuesday on a bill he’s sponsoring.
Earlier this month, legislation allowing low-dose intoxicating hemp beverages to continue to be sold in grocery and liquor stores won the approval of committees in both the Missouri House and Senate. Both bills, backed by the Missouri Cannabis Trade Association, prohibit anything but beverages to be sold outside of state-regulated and licensed marijuana dispensaries.
On Tuesday, Hinman criticized the MoCann-backed bills for potentially putting more than 2,000 small businesses “out of business and move all of the hemp products into the constitutional marijuana monopoly.”
Hinman’s bill is backed by liquor distributor Steven Busch and establishes the same three-tier distribution system that the alcohol industry has long abided by.
It offers guidelines for beverages, edibles, vapes and oils — such as proposing to limit edibles to only 5 mg of THC per serving and beverages to 10mg of THC per serving.
However, like the MoCann-backed bills, it also prohibits products with a high amount of THC from being sold outside of marijuana dispensaries.
Bills adding regulations to hemp-derived THC beverages advance in Missouri legislature
The committee debated a bill earlier this month sponsored by Republican state Rep. Ben Baker of Neosho that is backed by the Missouri Hemp Trade Association that would set the limit to 100 mg of THC per serving for edibles. He argued that some people who use the products medicinally require a higher dose.
Both Hinman and Baker’s bills direct the Division of Alcohol and Tobacco Control to issue and regulate the licenses, while having the Division of Cannabis Regulation oversee product testing.
State agencies provided estimates regarding how much it would cost their departments to regulate the products for each of the four bills lawmakers have debated so far.
For the hemp industry-backed bills, state agencies estimated high costs — about $20 million a year for Hinman’s bill and $95 million for Baker’s.
The biggest expense is for regulating compliance for independent testing laboratories across the country, a requirement in both bills. The agencies’ research estimated that the expense would eclipse the potential revenues from sales and license fees.
“In the best scenario, I would think we would try to get to a revenue neutral on it because we’re allowing a product to be sold and people want it,” said Republican state Rep. Rudy Veit of Wardville on Tuesday. “We shouldn’t necessarily subsidize it.”
At Tuesday’s hearing, MoCann’s lobbyist Tom Robbins argued that the bills the association supports – sponsored by Republicans state Sen. Nick Schroer of Defiance and state Rep. Chad Perkins of Bowling Green — do not have the high costs that the bills backed by the hemp industry.
“I don’t know that there’s an appetite to recreate the regulatory wheel with intoxicating products in places that kids go versus ours, which is zero dollars and removes the products from where kids can enter,” Robbins said.
However, state agencies didn’t provide complete cost estimates for the MoCann-backed bills because the agencies assumed they would prohibit “all or nearly all” the intoxicating hemp products currently on the market.
That’s because the agencies assumed nearly all of them are made with a process that would be banned referred to as chemical conversion – or converting the cannabis compound CBD that’s abundant in hemp into THC using chemicals. However, many hemp companies are not currently using this process, instead moving to the natural extraction process the MoCann bills allow for.
The bill sponsored by Perkins requires randomized inspections and periodically testing of hemp-derived beverage products.
The cost analysis for Perkins’ bill states the Division of Alcohol and Tobacco Control is “not equipped” to do such testing and would have to pay a lab to conduct the testing of samples collected by the division.
It states: “The cost for this testing is unknown but is anticipated to be a significant cost.”
A cost estimate for hiring a third-party laboratory was included in the bill sponsored by Baker — $73,908,288 per year. It’s much lower in Hinman’s bill, though it’s unclear why because the testing requirements are very similar.
Hinman agreed with several of the committee members that the cost of regulating these products shouldn’t come out of the state’s general revenue fund.
“If you’re going to give the opportunity to retailers to sell this product, they should be paying for it again through the fees and taxes they pay,” Hinman said. “I don’t know where that sweet spot is, but I’m sure we can figure that out.”
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